Principles of Economics
Economics Analysis Paper
Cell Phones In Prison
Inside of prison walls all over the United States prisoners look forward to one thing the most, having phone conversations with their loved ones. Over 2.2 million Americans incarcerated and the extremely high cost to purchase phone minutes has created a demand for cell phones in prison. The few companies that offer prison phone services have made minutes unaffordable for inmate’s families who are mostly low income. Not only the phone companies are making money off of these people in bad situations, the prisons are getting significant returns for every dollar spent on phone minutes.
Inside prison walls lies a small economy of it’s own. When there is a high demand for a good the price is driven upward. One of the main reasons an inmate needs a phone in prison is to avoid the excessive fees charged to talk to their family on the outside. A 15-minute long distance phone call from prison can cost in excess of six dollars. When the demand for cell phones rises the supply must also rise. Due to the fact that it is a federal crime to posses a cell phone in prison the prices rise because of the risk the suppliers are taking to sell their goods.
There are only a few companies that offer phone services for inmate calling. This creates an oligopoly, or an industry that is dominated by a small number of sellers. When there are few competitors for the oligopolists prices are driven very high because they work together to keep them up. The competition is narrowed even more when each individual state designates one company to handle prison phone calls and monitoring,
creating a monopoly. Global Tel Link is America’s largest provider of phone services in prison. They dominate the market causing high prices with no competition to lower them, thus fueling the demand for cell phones in prison and creating a whole new market....
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